MSP Today Expert Feature
June 17, 2014

Cloud Infrastructure Providers Make Up a Sizable Chunk of Server Market

When talking about the cloud, we usually go directly to the forward facing apps and services that businesses and end users are consuming at a rapid rate but the world of cloud computing comprises so much more. The infrastructure and hardware that power the cloud realm make up a good chunk of overall revenues.

Therefore, it’s not surprising that when it comes to spending on servers, cloud providers are turning out in force. Not only did cloud providers account for a record amount of spending on white box or generic servers in the first quarter of the year, but they are positioned to have a major impact on the overall server market.

When we talk about cloud providers, and specifically IaaS, a few major players typically come to mind, mainly Amazon, Google, Microsoft (News - Alert), and Facebook. According to new research from Dell’Oro Group, those companies are purchasing servers in such large quantities that they are set to have a “significant” impact on the market.

Alan Weckel, Vice President at Dell’ (News - Alert)Oro said that in North America alone, 17 percent of server shipments were white box, and more than one quarter of those shipments were estimated to be delivered to cloud providers.

AWS, the undisputed IaaS leader, is mum about the topology of its cloud infrastructure, but there are estimates that the company maintains anywhere from 150,000 to more than 400,000 servers. Last year Microsoft announced they have more than one million servers powering their data centers and also let it slip that Google (News - Alert) has even more. And Facebook has alluded to having hundreds of thousands of servers powering its social network.

Last year, IDC released research showing that sales of branded servers were on the decline. However, revenues from sales of original design manufacturer (ODM) servers rose 94.7 percent in the third quarter of 2013, reaching more than 69 million dollars. Nearly 80 percent of that revenue came from cloud infrastructure players like Google, Amazon and Rackspace (News - Alert).

“As cloud services keep growing in importance, it is crucial to recognize the trend and size the impact of new purchasing models for data center compute capacity, primarily for high-growth business-to-consumer web players and, partly, for infrastructure-as-a-service providers,” said Giorgio Nebuloni, research manager, enterprise server group at IDC (News - Alert)